Sunday, June 28, 2009

Michael Jackson’s death is turning into a nightmare for the organiser of “This is It”, the 50-concert gig of the pop icon scheduled to have begun on July 13 at London’s famous The O2 Arena. While refund of the 750,000 tickets seems inevitable at this stage, the financial implication of the canceled tour is far from clear. Some experts have estimated the loss could be upwards of £50 million.UK’s popular tabloid The Sun today reported that “the promoter AEG Live now faces the prospect of a £300million black hole in its finances. Jacko’s death has hit it with a £51million bill for ticket refunds”.

AEG, in a statement issued after Jackson’s death, said, “On behalf of the entire AEG organisation, we extend our deepest condolences to Jackson’s family and friends during this tragic time. Full ticket refund information and procedures will be released early next week for all Jackson “This Is It” shows. Fans are advised to hold on to their ticket vouchers/proof of purchase.”

When Jackson’s London tour was made official in March, ticket sales for the July shows broke new records. It was estimated that ticket sales were in the order of 11 per second, 657 per minute and nearly 40,000 an hour.

It was reported that third party sales of tickets on auction sites like ebay were ranging between £75 and £10,000.

Seatwave.com, one of the official channels selling the tickets, said, “We would like to reassure you that your Jackson ticket purchase is fully covered by our TicketCover guarantee. You can claim your complete refund by downloading our claim form...”

The show was also expected to resurrect the personal finances of the debt-ridden singer who was expected to make £50 million for his London performances.

Late Friday evening, AEG Live President & CEO Randy Phillips had said in a statement: “Yesterday was a day I will never forget, or want to remember. Jackson was weak and strong, clever and kind, talented beyond belief and equally insecure. He was a doting father, respectful son, loving brother, and caring uncle. He was my friend. I take great solace in the pride and confidence he exhibited during production rehearsals on Wednesday night. That is the memory I will cherish for the rest of my life.”

An AEG spokesperson said the updated ticketing statement will be issued later. It could not be ascertained if AEG had insured itself against such an event.

Saturday, June 27, 2009

Tata Motors (TM) posted a net loss for the first time in eight years, of Rs 2,505 crore for the year ended March 31, 2009, thanks to Jaguar Land Rover of Britain, its problematic acquisition.

A severe erosion in demand for luxury cars impacted the business of JLR, which posted a loss of Rs 2,400 crore for the 10 months starting June 2008, when it was acquired. TM had reported a net profit of Rs 2,167 crore for the year 2007-08, when the JLR financials were absent.

JLR was strongly profitable (Rs 4,770 crore net) in the 18 months to May 31, 2008, when it was owned by For Motor Company of the US.

TM officials warned of further job cuts in JLR, with more plant shutdowns. The company has already laid off about 2,000 workers, while its current employee strength is about 15,000.

Ravi Kant, Vice Chairman, TM, said, “We are helping JLR to react in a crisis situation. There may be more job losses, with more plant shutdowns. We have postponed additional cash requirements for JLR.”

Net sales for TM last year were Rs 70,370 crore, a growth of 98.74 per cent, as against Rs 35,408 crore posted in the earlier year.

The combined sales of JLR was 167,000 units in June-March, a drop of 32 per cent against 246,000 units sold during the same period in the previous year.

Apart from more layoffs and shutdowns, TM says it is also looking at sending JLR employees on a sabbatical, sourcing cheaper components and introducing tight cash control in operations.

JLR has secured an in-principle ‘green loan’ loan of Rs 2,700 crore from the European Investment Bank (EIB), but is yet to receive the mandatory guarantee from the UK government or any private bank against the loan. A JLR spokesman said talks with the government on this are on. Once the loan is approved, it is enough to take care of JLR’s operational requirements for the next 16-18 months, added officials.

Tata Motors has also repaid Rs 480-720 crore of the Rs 4,800 crore loan they had managed to roll over till December 2010.

Regarding the pension liability which TM is required to pay to JLR employees, the company stated the current valuation has reached 25,400 crore, as against the required payout of about 23,800 crore.

The payout has to be concluded by July 2010. Tata will be talking to JLR’s employees and trustees on this, said its Chief Financial Officer, C Ramakrishnan.

Thursday, June 25, 2009

Corus Group, Europe’s second-largest steel maker and a subsidiary of Tata Steel, today announced 2,045 fresh job cuts, mostly in three of its plants in the United Kingdom. These will be over and above the 2,500 job cuts it had announced at the beginning of 2009.

A statement issued today by Corus said the consultation process within the company identifies 2,045 jobs as being at risk. Some 1,500 of these are in the company’s production facilities — around 800 at the engineering steels sites, mainly Rotherham and Stocksbridge; about 370 in Corus Tubes in the UK and the Netherlands; and about 375 at downstream rolling and finishing plants in Teesside and Scotland. The company is also opening consultations on 500 white-collar jobs throughout the Corus Long Products division, the majority at Scunthorpe.

The steel maker’s parent company Tata Steel, in its statement announcing its financial results for 2008-09, further said the potential for compulsory redundancies cannot be ruled out, though efforts will be taken to make many of these job losses as voluntary as possible.

“Redundancy packages and outplacement support services will be available to those leaving the company. There will be full consultations with employees and their representatives throughout the process,” Tata Steel said.

Corus CEO Kirby Adams said: “We understand the difficulties these job losses are likely to cause our employees and their families. Any recovery in Europe appears to be some time off, so it is vital that we take this proportionate and responsible action now. We have to achieve long-term, sustainable competitiveness in a global and over-supplied steel market.”

During 2008-09, steel deliveries and liquid steel production for Corus fell by 14 per cent and 20 per cent to 19.69 million tonnes and 16.21 million tonnes respectively, reflecting a weak second half of the year. Turnover at Corus during the year, however, increased by 9 per cent to Rs 109,570 crore ($21,439 million) and, while EBITDA decreased by 2 per cent to Rs 8,906 crore ($1,751 million) in the financial year 2008-09 compared with the financial year 2007-08.

GMB, Corus Group’s primary labour union in the UK, in a statement issued in reaction to the fresh job losses, said that this was a devastating news and the union will need to talk to Corus as soon as possible.

The fresh job cuts, despite these initiatives were, as a result of the “continued to experience deteriorating market conditions” in some of the group’s European operations. including decline in demand in Europe and America.

These fresh job cuts also comes at a time when the company’s Teesside plant is the verge of being mothballed due to the loss of a major long term contract involving a consortium of buyers from Europe and Asia. The closure or even temporary shut down of this plant would result in nearly 2000 people losing their jobs.

The UK Trade & Investment (UKTI) today said that India had emerged as the second largest investor in the UK in 2008-09, moving from the sixth position it had held in 2007-08 with a total of 108 successful projects being commissioned here from India. The first position however remained unchanged with the 621 successful projects from the US.

The UKTI, which is the UK government’s international business development organisation, though not a regulatory body like India’s FIPB, acts as a via-media for foreign investors in the UK and assists the government to frame investor friendly policies.

The ranking is done purely based on the number of unique investors in the UK and not by the value of such investments. This method, according to UKTI, reflects the number of investors that have committed their money in the UK and is not influenced by the value of these investments.

In 2008-09 India beat Germany, which held the second position in 2007-08. Germany moved to the forth position while France moved to third position from the fifth position it had held in 2007-08.

The number of investors from India increased by 44 per cent over the previous year, taking the total to 108 foreign direct investments projects in the UK. For this compilation the investments are broadly divided into three types – new projects, expansion of existing projects and mergers & acquisition. While the break up for investments from India was not readily available, UKTI’s managing director Brain Shaw said that on an overall basis 47 per cent of the FDI’s into UK in 2008-09 were new projects, while 27 and 26 per cent were expansions and M&As respectively.

India and China were the only two BRIC economies to be among the top 10 investing nations in UK. China improved its ranking from ninth position to eight in 2008-09. Brazil held the 28th position with 7 projects commissioned in the UK and Russia had no new investments into the UK in 2008-09.

Business Secretary Peter Mandelson said, “…these results are testament to the fundamental strengths of the UK’ s economy and will prove our ability to come through this downturn stronger, and ready for success.”

Ironically, Mandelson’s optimism was voiced on the same day the UK government also announced that the unemployment numbers in the UK increased to 2.26 million, the highest in 12 years.

Commenting on this, John Cridland, CBI Deputy Director-General said, “The numbers of jobless are continuing to rise and we’re clearly not through the worst yet. Sadly, the CBI expects these figures to continue to rise and peak at 3 million in the spring of 2010.

“Making job cuts is the last thing that businesses want to do, and the government must do everything it can to help firms keep people in their jobs, as well as giving advice, training and support to those who have become unemployed,” Cridland said.

The CBI (Confederation of British Industry) is the UK's leading business organisation, that speaks for for some 240,000 businesses that together employ around a third of the private sector workforce.

The UKTI further said that in 2008-09, FDI had created 35,000 new jobs. In the past six years over 2.15 lakh new jobs were created due to inward investment projects, said UKTI.

CDC Group PLC, the UK's development finance institution, today committed $10 million (Rs 48 crore) to Rabo Equity Advisor's India Agri Business Fund, CDC's first investment under its new investment policy.

Under the new policy, which came into effect on January 1, the lending institution will focus more on investing in the world's poorest countries. Close to 75 per cent of new investments will go to countries, such as India, with an annual gross national income per head of less than $905.

The fund will invest in mid-level companies in the agri-business sector across the entire value chain - farming, logistics, production and marketing. The fund's first investment has been in Sri Biotech Laboratories, which produces organic agricultural products to improve and protect crop yields. The fund expects to make 10-15 investments in the range of $3 million (Rs 15 crore) to $20 million (Rs 100 crore) over a four-year period.

Anubha Shrivastava, managing director, Asia, CDC, said, "Although currently underdeveloped, agri-business in India has enormous potential. The India Agri Business Fund will open new opportunities for India's food companies, which, in turn, will be a great stimulant for economic growth through new jobs, improved infrastructure and economies of scale.”

“Indian agri-business companies, in contrast to their international counterparts, tend to be small and restricted in their product ranges, which leads to high unit cost of production and low global competitiveness. The Indian government's attempts to build food parks, upgrade institutional infrastructure and enable direct sourcing by processes from farmers are designed to address some of these bottlenecks, but private investment will help bridge the gaps in the sector,” said Shrivastava. Since its reorganisation in 2004, CDC has committed over $1.5 billion to South Asia.

The fund will be managed by Rabo Equity Advisor's New Delhi-based team. Rabo Equity Advisors' parent, Rabobank, has ten years of experience in the Indian food and agri-business sector.

Thursday, June 11, 2009

The Federation of Indian Chambers of Commerce and Industry (Ficci) has for the first time picked up a stake in a company — Skills Development Corporation set up by Government of India.

Ficci Secretary-General Amit Mitra, on an official visit here as part of a trade delegation, said this new not-for-profit organisation had been set up to improve the availability of skilled manpower in India and Ficci had picked a 10 per cent stake in this company for Rs 51 lakh.

The Skills Development Corporation itself is empowered with a corpus of Rs 1,000 crore. A Ficci representative will also be on the board of this company.

Further, Ficci has also been authorised by the Ministry of Labour to be an official testing centre for students coming out of ITIs. “In the last three months, nearly 12,000 people have taken tests at Ficci with a stringent pass rate of 25 per cent,” Mitra said. Tests are conducted in several areas like carpentry, metal working and welding, Mitra said.

Meanwhile, the visiting Ficci delegation met UK-based Commonwealth Business Council and has agreed to form a “clearing house” kind of institution to aggregate and disseminate information on companies in India and the UK that are keen on possible mergers and acquisitions.

Without specifying a time frame to get this idea rolling, Mitra said that a working group within Ficci would be formed to enable this at the earliest. The idea is to increase capital flows between India and the UK and also allow small and medium sized technology driven companies to find a big market like India.

A 17-member delegation from Ficci headed by its president, Harsh Pati Singhania, was in the UK on a two-day visit ending on June 10 to understand the ways and means to improve trade relations between the two countries. The delegation included CEOs from sectors such as pharmaceuticals, mining, cement, FMCG, energy, and information technology.

“We are trying to see how we can increase M&A between India and the UK and make a list of potential acquisitions and joint ventures that are possible in both countries,” said Mitra.

Singhania said that while large acquisitions in the UK by Indian groups like Tatas had been well known, several small and medium sized companies in the UK had also been acquired by Indian companies.

“While most other countries are looking at China, UK is clearly re-focusing on India. Particularly, tech-centric companies will find a large market in India by doing this,” said Singhania.

Ficci members also met with representatives of the Nuclear Industry Association for possible civil nuclear energy collaboration between India and the UK, particularly in the manufacturing sector., In

Wednesday, June 10, 2009

A survey conducted by trade facilitation body UK-India Business Council (UKIBC) has ranked Pune as the most suitable place for British investments in India. The survey report, titled ‘Opportunities for UK Plc in Emerging Cities in India’, also ranks eight other cities — Ahmedabad, Chandigarh, Jaipur, Goa, Indore, Kochi, Nagpur and Vadodara — as the most conducive destinations for UK investments in India.

The report is a product of “qualitative research through a process of in-depth interviews, reviews and perception surveys across various professional and social networks”. The report said in its preamble that close to 200 survey responses were analysed and over “150 key informants” were conducted to ensure an extensive and representative coverage.

While the report’s annexure lists 41 cities in the survey's ranking with Pune holding the top rank and Ranchi getting the lowest rank, it provides a detailed study of nine cities that merit UK investment the most.

UKIBC’s CEO Sharan Bamford, however, cautioned that the immediate priority of the report was to take the investments forward by pointing at prospective cities for UK investments.

The rankings are based on physical, social and cultural infrastructure and key economic indicators. Good quality roads, power connections, number of banks, health institutions and colleges, per capita income of each city and market size are some of the key parameters considered for the final listing.

Saturday, June 6, 2009

European football clubs have finally begun to tap their large fan base in India. English clubs like Chelsea, Liverpool and Manchester United as well as Germany’s Bayern Munich have queued up to capitalise on their fan base in the country and create new business opportunities.

Experts have estimated that the huge following for European football in India is good reason for these clubs to get active in the country.

Berlin-based www.Indianfootball.com’s CEO and Editor-in-Chief, Arunava Chaudhuri, has estimated that there are over 160 million football fans in India and 20 million active footballers. In comparison, Germany — where the sport has a long tradition — has 16.3 million active footballers.

The clubs have taken different approaches to the Indian market. Liverpool, for example, is planning to set up a centre of excellence in Pune, which is expected to be formally inaugurated next week. While the club could not be reached for comments, it is believed that this new centre will first look to develop support infrastructure such as management and physiotherapists before it gets into active training.

Bayern Munich is working with the West Bengal government to set up an academy in Burdwan. Manchester United had earlier announced plans to work with the Bharti Group to set up a National Football Academy. The status of this $100-million project is, however, not clear now. Manchester United has also made its content available exclusively to Airtel subscribers in India. Subscribers will also get to train at the Manchester United Soccer Schools run by Manchester United Merchandising.

Merchandise, which is an important source of revenue for these clubs, is actually the big reason that is driving the football clubs to India. At a recent seminar hosted by the UK-India Business Council on bringing European sports to India, Adidas’ head of global sports marketing, Jocelyn Robiot, said that the estimated size of the sportswear market in India is ¤370 million (Rs 2,300 crore) of which Adidas along with Reebok controls 75 per cent. “After cricket, football is clearly the second most popular sport in India, followed by badminton and tennis,” he said.

“Merchandise is big business for these clubs. In Germany, even water and milk are branded with the club logos and they sell well,” said Chaudhuri. As a keen follower of the game worldwide, he believes that other European teams like Barcelona, AC Milan and Real Madrid too are now eyeing India to develop a fan base.

Most business interests in bringing European football to India in a big way rests on the sheer size and buying power of the youth in India. The 325 million Indians in the age group of 20-35 are a compelling destination for these clubs.

Chelsea Football Club’s CEO, Peter Kenyon, said that football in India is bracketed with other popular youth activities likes fashion, music and films. After scouting for business opportunities in India for over a year now, he said, the youth in India are looking at football as their game as much as cricket was their fathers’. Kenyon said the lack of sports infrastructure and star players are two of the biggest challenges for the success of football in India so far. He added that these are also the areas of expertise the European clubs can bring to India.

Tuesday, June 2, 2009

CEO Kriby Adams expected to meet members of the international consortium of buyers who had walked out of a 10-yr contract.

Kriby Adams, CEO of the Tata Steel-owned European steel company Corus, is expected to meet members of the international consortium of buyers who had walked out of a 10-year contract to buy from Corus’ North-East Teesside plant.

Adams will initiate a new round of discussion to avoid the plant’s closure, which could potentially kill 2,000 jobs in the company.

The Corus chief is expected to meet the consortium members in Seoul, South Korea where one of the buyers Dongkuk is based. This developments comes at a time when Corus has already initiated legal proceedings to ensure that the consortium

honours the contract which will end in 2014. A Corus spokesman refused to confirm or deny Adams’ plans to meet the consortium members later this week.

“I will be careful not to use the word re-negotiations. However, Corus has always maintained that it is open for discussion,” he said.

Early last month, the consortium of four buyers — Marcegaglia of Italy, Dongkuk of South Korea, the Swiss-headquartered Duferco and Alvory of Uruguay — had decided to stop buying steel from the Teesside plant due to a fall in the global prices of steel.

The consortium had signed a deal with Corus in 2004 to buy up to 78 per cent of the plant’s output, stretching into 2014.

The loss of this contract forced Corus to announce earlier that it would be left with little choice but to temporarily shut down this plant.

The termination of the contract by the consortium members had triggered a political wave in UK that has, so far, seen Prime Minister Gordon Brown, Business Secretary Peter Mandelson and Redcar (where the Teesside plant is located) Labour MP Vera Bair voicing their support for Corus. Bair visited Italy last month to meet the leader of the consortium Antonio Marcegaglia.

It has been widely reported that two of the members of this consortium might be willing to buy the Teesside plant which could potentially avoid the job losses.

On March 29, Tata Steel UK, a 100 per cent indirect subsidiary of Tata Steel and the holding company of Corus, had received lender approval to reset the covenants in its £3.7-billion acquisition-related senior debt facility. The lenders had voted unanimously in favour of the company’s proposal to reset the covenants.

As part of the agreement reached with the banks, earnings-related covenants will largely be suspended till March 2010 and will then resume with significantly higher flexibility than in the case of the original covenants. It has also been agreed that there will be no increase in the current level of interest costs for the remaining life of the loan.

The revised covenant package does not involve any additional finance from the lenders or rescheduling of its debt-servicing commitments. Further, Tata Steel will inject £425 million into Tata Steel UK in a phased manner, of which around £200 million will be used to prepay debt and de-leverage the European balance sheet

Corus is Europe’s second-largest steel producer with annual revenues of more than £12 billion and a crude steel capacity of about 20 million tonnes. Corus is a subsidiary of Tata Steel, one of the world’s top ten steel producers.

The Indian conglomerate had bought Corus in 2007, taking the total crude steel making capacity of the group to 28 million tonnes and the number of its employees to approximately 82,700 across four continents.

For someone whose idea of life outside India for the first thirty six and half years of his existence restricted to occasional corporate junkets with glimpses of airports and star hotels, the last six months in London as a resident has been a completely new experience. This is my short preface to five new and unique experiences I have had and I wish to share now. I assure dear reader, that none of this is profound and you should take this more than a mere scribble in my diary at your own peril.

#1 Tube FaceThe indispensable London Underground seems to have one undesirable impact on its users. I am yet to meet a smiling face in the tube. People simply don’t smile when they get 24 meters (average depth of the tube) below the ground. My rotten arrogance surfaces once in a while and I try to break this by smiling at a stranger with a hope of setting a new record in the tube. The best response I have received so far is a nod that lasts no more than a nano-second.

#2 Ear-shattering blowAn average Londoner is a perfect gentleman/lady. There cannot be two opinions about this. Why then do they blow their noses so loudly in public places is something I am yet to understand. Take this literally. When a Londoner blows his nose, he ensures that people five meters on either side hear it. The saving grace is that he/she always, always uses a tissue.

#3 Week-end frenzyLife during weekends, starting from Friday evening goes on the fifth gear. There is a manic planning that precedes this. What am I going to do this weekend is an essential question that every self-respecting Londoner seems to be asking himself. While the average answer to this is not very creative, it is just another harmless side of the simple-minded Englishman. Get ready to see miniature barbecue stoves on the balconies of garden-less apartments like the ones I live in!

#4 Beer and ale guzzlersThis my favourite. A pint of beer bang in the middle of the day? This is a futile question only a narrow-minded (and hypocritical) Indian like me can ask. I remember being petrified of being caught by my boss every time I had a beer with lunch when I was in Delhi. God knows how many cartons of “Centre Fresh” must have covered my darker side. Here and now is my chance to lead a guiltless life. You will be the odd one if you order your lunch without the beer. Cider for the ladies.

#5 Queue crazyActually this my real favourite. It almost seems like my English-speaking friends love to stand in the queue. Something tells me its part of their religion. Why else would there be so many queues all over London. From smallest roadside newstand to the plushest of plush malls have innumerable queues. The queues only seem to grow as the the shops add more tills. Just draw a yellow line with the words “stand behind this line” and you will have a dozen folks ready to fall in line. Memorize this one. It will save your life some day. I once walked up to a newstand which seemed deserted to buy a pack of cigarette. The vendor gave me a cold stare and then I heard a booming hello (not greeting definitely) behind me. A solitary customer apparently was waiting in the “queue” for the vendor to say “next please.” I almost gave up smoking that day.